Deal of the day:a sign of Chinese property consolidation
By Heather West,Yumin Wang,Yiqing Wang of mergermarket
In a sign that more consolidation could be on the way in China's real estate sector,Xi'an Minsheng on Wednesday
acquired a smaller property group in Shanxi province.
Xi'an,the regional capital,is the land of Terracotta Warriors,but it's an army of fevered property investors that has worried Chinese authorities this year.However,Minsheng's move comes as government measures to cool the market are working,making small developers juicy acquisition targets.
Minsheng pard approximately $50m for Huacheng property,a group located in a fast-growing area of the city of Xi'an where competition is less fierce than in more developed commercial zones and where disposable income is on the rise.
Minsheng itself is listed on the Shenzhen stock exchange and is a subdidiary of HNA Group.Its prize asset is a department store building and it had revenues of around $180m last year.
Since the Chinese property market reached fever pitch earlier this year the government has introduced measures to curb the bank lending that drove it, including a directive to banks to refuse mortages to customers looking to buy a third home.
Those measures have taken some heat out of the market and analysts say the result will be many small developers runnng short of cash and being forced to sell out.That's especially likely in second and third-tier cities.
Property assets in key cities like Shanghai and Beijing are in high demand,but owners there are less likely to sell. |